When you pwn somebody so badly that the person's ego is annihilated for all eternity. Also, pwnnihilation can be cast upon a person's character in a game, as in pwnnihilation where the character is killed in a ridiculous manner.

After being pwnt in a game, instant pwnnihilation occured to Russel.

The character experienced pwnnihilation as she was thrown off screen after being hit by a turkey.